New tax in Austria: 2 Euros per parcel from online retail

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Soon, retailers will have to pay two euros per delivery to the tax office for each delivery within Austria. Retailers with annual sales of less than 100 million euros are exempt. The Austrian federal government has decided this. It sounds simple but is complicated in detail. The new “parcel tax” is expected to generate 280 million euros, which will help finance part of the also decided halving of value-added tax on selected foodstuffs. This measure creates a 400 million euro hole in the budget, which needs to be closed.

Originally, Vienna planned to levy its parcel tax only on parcels from third countries under the banner of protecting stationary retail. However, that would be a customs duty, and since the European Economic Area (EEA) is a customs union, Austria cannot impose new customs duties on its own. Therefore, the parcel tax will now also apply to parcels arriving from within the EEA – in addition to the tariffs decided at the EU level.

As is well known, from July onwards, three euros will be due in the EEA for every package arriving from abroad with a value of goods up to 150 euros. In addition, from November, a processing fee levied by all EU states is to be introduced. Two euros per package are being discussed for this. It is not to be confused with the significantly higher processing fees of carriers and customs service providers.

Difficult enforcement for third countries

It is unclear whether the turnover threshold of 100 million euros in annual turnover worldwide applies only to the EEA or only to turnover in Austria, and whether it concerns only turnover from online retail, or trade in general, or total turnover. It is also uncertain how third-party traders selling through large platforms like Amazon.com will be treated. But even if only domestic online retail sales of individual retailers are considered, the parcel tax does not only affect large corporations like Amazon and Temu.

For example, Otto Austria, Ikea with its competitor XXXLutz, Mediamarkt, and ironically, supermarket chains with home delivery would be affected. Yet food is supposed to become cheaper. The Carinthian retailer Electronic4you also has to pay, which is particularly painful in the tough price war in electronics. The trade association points out that the turnover threshold is hardly controllable for Asian retailers. In fact, it is difficult to imagine how the Austrian tax authorities will efficiently determine whether or how a distant 176-671 AG is affiliated with a 176-617 AG.

The devil is in the details

The announcement leaves many further questions unanswered. Can the retailer show the parcel tax separately and charge it directly to the customer? Or must it be included in the price of the goods or the delivery costs, and then usually 20 percent value-added tax is added? This would quickly turn the two euros into 2.40 euros per package for consumers.

What exactly is “a package”? Are several boxes or baskets delivered together considered separate deliveries, even if they come from the same sender? That would be an incentive for additional packaging, such as wrapping in otherwise unnecessary plastic film. What applies to flower deliveries to cemeteries or restaurant orders? Will the delivery of a replacement device under warranty also be taxed? Or the delivery of a repaired device? How will incorrect deliveries or lost packages be considered?

Where is the line between tax-free “collection of goods in the store” and taxable “deposit of a package in a branch”? What about long-term contractual relationships, such as the regular delivery of printer ink? Or if an order can only be partially fulfilled and delivered later? May affiliated companies send and charge each other items tax-free on parcels? There will probably be an exception for subscriptions to newspapers and magazines, but would the former Ypsheft be about the printed matter or the brine shrimp? What about individual periodicals, say a reordered issue of c't? Austria's legal experts and tax investigators will not be short of work.

Company cars, plastic, and food

Even if the parcel tax generates 280 million euros, a gap of 120 million euros remains. This was supposed to be closed by a tax on plastic packaging. Following strong protests from the business community, Austria's government is backing down. According to food retailers, the plastic tax plus administrative costs would have cost more than the VAT reduction brings in, meaning food would have become more expensive overall.

Instead of the plastic tax, Austria's government now wants to tax company cars more heavily – how exactly is still being worked out. In any case, there is an “appropriateness limit” of 40,000 euros per new car that has not been adjusted for 21 years. The Vienna Chamber of Commerce is calling for this limit to be raised, arguing with the mobility transition. More than 70 percent of all new registrations of electric and hybrid vehicles in Austria are for companies, and such vehicles generally cost significantly more than 40,000 euros.

The value-added tax rate for selected foodstuffs will be reduced from ten to 4.9 percent. This applies to animal milk without additives (i.e., not for chocolate milk, etc.), yogurt, butter, chicken eggs, vegetables (fresh and chilled), fresh stone fruit, and fresh apples, pears, and quinces, bread and pastries (unless honey, eggs, cheese, or fruit are included), unfilled pasta, rice, wheat flour and semolina, and table salt. In catering establishments, the full tax rate of ten or twenty percent, respectively, still applies when serving such foodstuffs, for example, a fresh pear or a glass of milk.

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